Mortgages and life insurance in Portugal

It is very important to know how to differentiate between different types of insurance cover in Portugal that are connected to mortgages.

Photo by Ashkan Forouzani on Unsplash
Photo by Ashkan Forouzani on Unsplash
22 October 2020, Redaction

Buying a house is a decision of great responsibility, and especially if you have decided to buy property abroad in Portugal for the first time. Along with many other things, such as deciding where exactly to live, or finding the right mortgage in Portugal, it is essential to be aware of all the costs involved in the process, as they can often be different compared to your country of origin.

One extra cost and thing to consider, for example, is insurance. Many banks will offer you both life and home insurance when taking out a mortgage, but knowing how to choose the best life insurance associated with your home loan is very important. It is not enough to simply analyse the price, but you must be aware of the coverage, exclusions and conditions before signing any contracts. IAD and ITP are two types of life insurance that are commonly found in Portugal, and today we are here to explain their differences to you.

"If you take out life insurance through your bank, you can benefit from a reduction in the spread. However, you should check whether it pays to take out insurance with another insurance company, i.e. whether the reduction in spread compensates you for the possibility of getting cheaper insurance", state our mortgage experts at  idealista/créditohabitação.

The price difference in life insurance premiums in Portugal is often justified by their coverage. That's why it's so important to know how to distinguish them:

  • IAD (Absolute and Definitive Disability)

To activate IAD (Invalidez Absoluta e Definitiva) coverage you will have to be incapable of exercising a paid activity and assume that you need a third person to help you meet your basic needs. In principle, you will have to have a degree of disability of more than 80%, which represents a "vegetative" state.

  • ITP (Total and Permanent Disability) 

In the case of ITP (Invalidez Total e Permanente), you need a degree of disability of more than 66%, which presupposes that you are incapable of exercising a profession, but you are not dependent on others for your basic needs.

Although the payment of a life insurance premium has an important weight on a household budget, specialists point out that this type of insurance is fundamental to cope with unexpected situations, guaranteeing the protection of your entire family.

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